By Andy Young

Tabcorp Holdings Limited (Tabcorp) and Tatts Group Limited (Tatts) have announced that both companies have agreed terms for a merger, creating a “world-class diversified gambling entertainment group”.

The deal will see Tatts shareholders receive 0.80 Tabcorp shares plus 42.5 cents cash for each Tatts share held. On completion of the transaction existing Tabcorp shareholders will own around 42 per cent of the combined group and existing Tatts shareholders will own the remaining 58 per cent.

In a statement to the ASX the combined companies said: “The Directors of both Tabcorp and Tatts believe the transaction represents a unique and compelling opportunity to create significant value for Tabcorp and Tatts shareholders, a winning offer for customers and material benefits for stakeholders, including the racing industry, TAB agencies, licensed venues, small businesses, and Federal, State and Territory Governments and regional communities.”

Tabcorp’s chairman added: “Together we will be able to pursue more investment and innovation to deliver a winning offer for customers, including best-in-class digital products and experiences.

“In wagering, combining our two complementary businesses will give us a national footprint and could create a pathway to larger wagering pools. We are excited by this opportunity, which we believe will deliver an enhanced wagering experience for our customers and, in turn, will generate stronger returns to the Australian racing industry, underpinning its sustainability.”

The combined group will have totaliser and fixed odds licences and retail wagering networks in ACT, NSW, NT, QLD, SA, TAS and VIC, offering wagering products in approximately 4300 retail outlets, plus a Keno distribution network of over 4200 venues across clubs, hotels and TAB agencies in the ACT, QLD, SA and Vic and in clubs and hotels in NSW.

Tatts chairman Harry Boon said that the merger is based on clear industrial logic.

“It comes at a time of escalating competition from new business models and rapid consolidation of gaming and wagering companies globally. The scale and efficiency benefits from this combination will provide a stronger platform in this dynamic environment,” said Boon.

He added: “A combination of Tabcorp and Tatts has been the subject of numerous discussions between the two companies over time and this transaction is fully supported by our respective boards.”

The deal is now subject to satisfying regulatory conditions, including competition approvals and approvals from various industry and State Government wagering, gaming, monitoring and lotteries regulators. Tatts and Tabcorp said in a joint statement that they expect the transaction to be complete in mid-2017 following Tatts shareholder, regulatory and other approvals.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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